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Dannica Corporation produces products that it sells for $40 each. Variable costs per unit are $25,...


Dannica Corporation produces products that it sells for $40 each. Variable costs per unit are $25, and annual fixed costs are
The marketing manager of Benson Corporation has determined that a market exists for a telephone with a sales price of $22 per
Dannica Corporation produces products that it sells for $40 each. Variable costs per unit are $25, and annual fixed costs are $360,000. Dannica desires to earn an after-tax (post-tax) profit of $150,000 for the year. The expected income tax rate is 20%. Required: Determine the sales volume in units required to earn the desired after-tax profit. Multiple Choice 30,180 Units 28,922 Units 34,000 Units NR NA
The marketing manager of Benson Corporation has determined that a market exists for a telephone with a sales price of $22 per unit . The production manager estimates the annual fixed costs of producing between 40,200 and 81300 telephones would be $532,600. Required Assume that Benson desires to earn a $131,000 profit from the phone sales. How much can Benson afford to spend on variable cost per unit if production and sales equal 47,400 phones? Variable cost per un
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ReportAnswer #1

1. units required to earn a desired profit = fixed cost + desired amount of profit

  contribution per unit

contribution per unit is not given, therefore,

contribution = selling price - variable cost per unit

= 40-25 = 15

units required = 360,000+150,000 / 15

= 510,000/15

= 34,000 units.

2. as per the question,

units= 47,400 fixed cost = 532600, (because the units produced is between 40,200 and 81,300.)

desired profit = 131,000 variable cost = as it is not given, assume as V

price = 22

we know that,

units required to earn desired profit = fixed cost + desired profit / contribution per unit

contribution = selling price - variable cost

= 22 - V.

substituting in above formula gives,

47,400 = 532,600 + 131,000 /22-V

47,400 = 663,600 / 22-V

47,400 (22- V) = 663,600

   22-V = 663,600 / 47400

22-V = 14

V = 22-14

Variable cost = 8.

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